Availing home loan & hra exemptions

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Vaish T

93 Points Posted on 21 December 2015

I work in a private company in Mumbai and avail HRA. In Dec-2012 I bought an apartment at my native place with SBI Home loan. The EMIs were started immediately. In June-2015 I got possession of the apartment. This is the first and ONLY house in my name. Currently my family (spouse, parents, kids) stay in this new apartment. However for work purpose, I have to stay at another place (Mumbai) using rented accommodation. Question is: 1. How should I declare the status of this property (new apartment)? ‘Self-Occupied’, ‘To-Let’ or ‘Deemed-to-let’? Since I have not rented out the new apartment to anyone, can I state it is as ‘Self Occupied’? 2. If it is ‘Self Occupied’, can I claim both, HRA and Home loan exemptions, for the FY 2015-16? 3. In case of ‘Self Occupied’, if I cannot claim HRA and Home Loan exemptions together, do I need to declare it as ‘To-Let’ to avail both exemptions? In that case I would need to show some earnings from the House property as rent while filing tax returns next year, even though actually I am not earning anything from the property. 4. Which IT return form I need to file now for FY2015-16/AY2016-17? (I was filing ITR1 till this year). I don’t have any other income other than Salary now. I believe, many of us would facing this question long time. Many of my colleagues, simply use either HRA or loan exemption in this situation. Hence I need expert advice from you which would help me to save more tax. Please provide Thank you.

Replies (5)

Vaish T

93 Points Posted on 24 December 2015

Any updates on this query?

Ankit Taprania

CA FINAL

416 Points Posted on 24 December 2015

1.Unless and untill you have rented your your house , it will be regarded as " self occupied".

2. Even if that house is stamped as" self occupied " , HRA will be available to you . because the location of house and the place you are living on rent are in different cities .

3. yes you can claim both interes deduction and HRA . BUT your deduction of home loan interest will be restricted to 200000 per annum , even if actual interest paid is more.

4 . if you show the house as rented , its rental income will be taxable in your hand BUT you will be allowed to claim full amount of interest as deduction

5. you are only required to file ITR 1. showing income from salary and loss from house property.

Vaish T

93 Points Posted on 24 December 2015

Thank you very much Ankit for detailed reply. FY 2015-16, my loan interest would not be above 2 lacs, so I am not worring about it. As you mentioned, while filing return with ITR-1, I will specify the house as "self-occupied". Some people suggested that I have to show some notional rent even if it is self-occupied (with intention of showing it as unoccupied to claim HRA). But you have clarified by doubts. Please let me know if my understanding is incorrect in any way. Thank you very much again.